VALUATION VIEWS QUARTERLY REPORT 2026 QUARTER 3
PREPARED BY: IA Valuations
SPOTLIGHTS Agency Staffing Compensation Investing in the Next Generation
AGENCY STAFFING COMPENSATION AND THE DECISIONS LEADERS MUST MAKE This
edition
of
Valuation
Views
examines
If
an
agency
has
high
net
revenue
per
An
employee, it’s important to understand why.
agency’s team is an important consideration in
Has the agency developed processes that allow
its valuation, and owners planning for growth
its
can benefit from tracking key performance
existing working hours? Or are owners and
indicators related to staffing and employee
employees working longer hours to serve more
costs. Across every agency revenue band, IA
clients
agency
staffing
and
compensation.
Valuations observed a decline in compensation spending, including payroll and benefits, as a percentage
of
revenue
between
2023
and
2025. Over that period, agencies generated more
revenue
relative
to
employee
costs,
indicating that compensation did not rise at the same pace as revenue.
employee also rose across low-, middle-, and agencies,
to
support
because
of
more
business
inefficient
within
processes?
Understanding what drives this capacity helps leaders evaluate whether growth is sustainable and how it affects the well-being of owners and employees. The answer can have important implications for agency value. High-value
agencies
focus
on
developing
processes and investing in systems that support
Between 2023 and 2025, net revenue per high-value
team
suggesting
higher revenue per employee while reducing the risk of staff burnout. The aim is to expand the team’s capacity in a sustainable way.
that
employees are supporting more revenue per
With its focus on staffing and compensation,
person. What might explain this trend? Several
this edition of Valuation Views offers insight
factors may be contributing, including the P&C
into the conditions and trends other agencies
and health insurance rate environment, along
are
with agency technology and the quality of
recipient of IA Valuations’ Excellent Agency
agency operations.
Distinction, highlighting one agency’s approach
experiencing.
It
also
features
another
to recruiting and developing sales talent. By: Jarod Steed, Business Planning & Valuation Analyst
Valuation Views contact@iavaluations.com | (614) 552-3036
1
COMPENSATION SPEND BY REVENUE BAND
The All-Agency Trend Compensation spend as a percent of revenue declined 4.6% from 57.2% in 2023 to 52.6% in 2025. Over the same time period, agencies averaged a growth rate of around 10%. This decline in compensation spend relative to revenue size indicates agencies are generating more revenue for each dollar spent on employee compensation. Industry conversations suggest that many agencies would be comfortable investing more inn staff compensation than they are today, particularly as small agencies continue to look for opportunities to hire. The “Scaling” Revenue Band The $500K - $1M revenue band can be an inflection point for agency leaders: invest in staff to support growth or maintain their current operating model. Higher compensation spending as a share of revenue may reflect investments in staffing that meet current demand while creating capacity for future growth. As revenue grows into that capacity, compensation may decline as a share of revenue, provided staffing costs grow more slowly than revenue.
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2
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COMPENSATION SPEND BY VALUE SEGMENT
Source: IA Valuations Proprietary Data. N or sample = 229.
Metric Definitions Weighted Agency Comp Spend: Of every $1 of net revenue generated by agencies in this segment, how many cents were spent on employee comp? Median Agency Comp Spend: How much did the agency at the midpoint of the value segment spend on compensation? Compensation Profile of High Value Agencies You might expect high-value agencies to spend substantially less on compensation as a share of revenue. Instead, the ratios are similar: 56.4% for high-value agencies, compared with 57.2% and 57.6% for the other value segments. These figures suggest that compensation spending alone does not account for differences in agency value. In our valuation experience, the strength and depth of an agency’s team also matter. We consider whether capable employees are positioned to cover key roles, whether the sales team includes producers at different career stages, and whether the agency consistently develops new producers into validated producers. Together, these factors provide important context that the compensation ratio alone cannot capture.
Valuation Views contact@iavaluations.com | (614) 552-3036
3
MEDIAN TOTAL PAY BY ROLE AND BY AGENCY MARKET
Metric Definitions Median Total Pay: Agency reported Salary/Hourly Wage + Commission + Bonus comp. Agency Staffing Profile Staff Tenure:
Number of Staff:
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AGENCY EFFICIENCY IS INCREASING: BREAKING DOWN REVENUE PER EMPLOYEE
Source: IA Valuations Proprietary Data. 2025 represents 2025 Agency Financial Data.
All-Agency Average Overall, from 2023 to 2025, the average net revenue per employee increased by 22.4% or from $153,525 to $187,926. Low-Valuation Segment This agency segment experienced an increase in net revenue per employee of 6.6% on average or from $133,190 to $142,027. Mid-Valuation Segment This agency segment experienced an increase in net revenue per employee of 19.4% on average or from $134,901 to $161,034. High-Valuation Segment This agency segment experienced an increase in net revenue per employee of 11.6% on average or from $195,734 to $218,449.
Valuation Views contact@iavaluations.com | (614) 552-3036
5
THE LONG GAME Defining Investing in the Next Generation For many independent agencies, growth and
The Power of Looking at the Numbers
hiring can feel reactive; a producer retires, a
Like
key
Insurance was growing long before it adopted a
employee
emerges
leaves,
that
or
requires
an
opportunity
additional
staff.
many
formal,
successful
metric-driven
agencies,
approach
to
O’Neill business
Recruiting often becomes a response to a need
planning. However, a pivotal moment came in
rather than a deliberate strategy. The O’Neill
2019 when the agency began participating in
Insurance
Cincinnati
Insurance’s
Institute
and
Agency
has
taken
a
different
approach.
Agency
partnering
Leadership
with
Reagan
Consulting’s Best Practices to analyze agency As
a
recipient
Agency
of
IA
Distinction,
Valuations’ O’Neill
has
Excellent
performance. Those experiences helped the
built
leadership team view their business through a
a
reputation for strong performance, intentional
new lens.
planning, and a commitment to investing in the next generation of talent. While the agency’s
Rather than relying on instinct alone, they
success has been decades in the making, owner
began to measure key performance indicators
Pat O’Neill’s philosophy is simple: the decisions
such as sales velocity, net unvalidated producer
agencies make today should position them for
payroll (NUPP), and revenue per employee.
success down the road.
Additionally, and perhaps more importantly, the O’Neill leaders set a lofty goal to invest in the next generation of leaders. That goal changed their
approach
development.
to
recruiting
Instead
of
and
waiting
producer until
they
The agency’s growth story began in the 1990s
desperately needed talent, they began treating
when Pat’s father, Patrick, acquired a small
hiring as an ongoing business function.
local agency and spent more than a decade expanding it through both organic growth and
Analyses showed that NUPP, a key metric for
acquisitions. Inspired by his father’s success,
O’Neill Insurance, was too low. This is one way
Pat
to
pursued
a
career
in
insurance
after
measure
investment
into
the
next
graduating from Miami University, spending six
generation. So, they decided to increase their
years
Cincinnati
NUPP to reflect their commitment to the next
Insurance before joining the agency. Over time,
generation. In order to do so, they would need
he developed as both a producer and a leader
to find some producers to invest in. It meant
before purchasing the agency from his father
getting serious about recruitment.
on
the
carrier
side
with
and becoming the majority owner about 2.5 years ago.
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Finding these candidates requires creativity
As Pat explains, “We treat
and
finding producers like we do
persistence,
and
a
significant
financial
investment. While recruiting and developing is
finding prospective clients.”
a huge piece of what Pat does, he and his team are all busy with other client and operational
The comparison is fitting. Just as agencies
tasks. They do their best to tackle hiring as a
maintain pipelines of prospects, O’Neill strives
team
to
recruiting. O’Neill has sourced talent through
maintain
a
pipeline
of
future
talent.
and
are
not
Recruiting remains a constant priority, even
employee
when immediate openings do not exist. Some
acquisition
specialists,
years, the focus is on hiring; other years, like
internships.
The
this
candidates
from
year,
more
resources
are
devoted
to
referrals,
shy
to
outsource
recruiting
firms,
talent
networking,
and
agency
also
diverse
their
embraces
backgrounds,
and
training and validating new producers. Either
while these individuals often require longer
way, leadership is always trying to connect
development timelines, the agency views that
their actions to their goals.
investment
favorably
when
the
person
embodies the right values and matches the culture they’ve spent so long curating.
Investing Before the Return Appears One
of
the
most
important
lessons
from
O’Neill’s experience is that meaningful growth
Culture as a Competitive Advantage
and
often
For O’Neill Insurance, hiring isn’t just about
require delayed gratification. Developing talent
filling positions or finding technical expertise.
is
successful
investment
It
requires
time,
resources,
Culture plays a critical role in every hiring
and
patience.
New
producers
decision.
expensive.
mentoring,
employee
typically do not generate immediate returns, especially when they come from outside the
The agency has developed a documented hiring
insurance industry. Yet O’Neill continues to
process that includes interviews with multiple
make those investments because leadership
current employees, cognitive and behavioral
understands the long-term value they create.
assessments, and reference checks. However, leadership believes the final piece of the hiring
The agency’s current producer development
puzzle often comes down to cultural fit. Culture
efforts illustrate this commitment. Three newer
is hard to define, which is why the leadership
producers are still unvalidated, requiring closer
team developed a set of 30 “Fundamentals” to
attention from agency leadership. One of these
be
new hires is their intern from last year, who
fundamentals
emphasize
qualities
such
recently joined the team as an Associate Risk
accountability,
integrity,
respect,
personal
Advisor and is now progressing through an 18-
ownership, and having fun.
month producer training program.
evaluated against these to try to identify a
their
guiding
light.
These
cultural as
Candidates are
culture fit.
Valuation Views contact@iavaluations.com | (614) 552-3036
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The result is an environment where employees
For agencies looking to strengthen their own
are aligned around a common vision for how to
future, O’Neill’s example offers an important
treat clients and teammates, and where long-
reminder: sustained growth rarely happens by
term investments in people have a greater
accident. The strongest agencies build plans,
chance of succeeding.
measure performance, develop talent pipelines, and make investments long before the results
A Blueprint for Future Growth
are visible.
O’Neill’s success is not the result of a single initiative. Rather, it reflects years of intentional
That mindset is what separates agencies that
investment
the
react to change from those that are prepared
leaders
for it. At O’Neill Insurance, the focus isn’t
slowing down and working on the business, not
simply today’s tasks. It’s on equipping the next
just
and
generation of leaders to do what’s best for the
investment in the next generation. The agency
client, long after Patrick and Pat O’Neill are at
has
business. in
across
Their it.
performance resources,
journey
They
invested
multiple
in
areas
began
focused
on
of
with
growth
leadership
development,
the agency. Those qualities have contributed to
benchmarking,
recruiting
the O’Neill’s long-term success and earned the
intelligence,
agency a place in IA Valuations’ inaugural class
technology,
artificial
and multiple outside consultants for various areas
of
the
business.
Each
of Excellent Agencies.
investment
supports a broader strategy centered on longterm growth and sustainability.
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ABOUT IA VALUATIONS Founded in 2017, the IA Valuations team has performed over 400 valuations for independent insurance agencies across the U.S. Our advisors have 30+ years of experience guiding agency owners in maximizing their agency value, planning, and legal needs for ownership transition. In addition, IA Valuations has provided perpetuation planning, financial modeling, and business planning for independent insurance agencies. IA Valuations has advised dozens of agency owners on selling their agencies through Agency Link, a platform that connects buyers and sellers together to further the growth and strength of the IA system. We strive to push the independent agency industry forward through thoughtful analysis and insight. IA Valuations hopes to partner with your agency so that together we can propel your agency and strengthen the system as a whole. For additional questions about this report or to learn more about the services we offer, please reach out at contact@iavaluations.com.
BUSINESS PLANNING TO HELP YOUR AGENCY REACH ITS GOALS INTERNAL PERPETUATION PLANNING You want to keep it in the family, but don’t know the right way to go about it. IA Valuations ensures a seamless transition of leadership while preserving the agency’s legacy and long-term goals.
AGENCY LINK Whether you’re looking to sell your agency or acquire a new one, understanding the intricacies of this journey is crucial. IA Valuations specializes in guiding IAs through every step of the buy-sell process to ensure a smooth transition.
BUSINESS CONSULTING SERVICES We offer additional services and guidance to agency owners, including: financial modeling for producer hiring, ownership transitions, buy/sell, due diligence, strategic planning, and other consultative services to help you grow your agency.
PROUDLY AFFILIATED WITH:
YOUR AGENCY VALUATION TEAM Jeff Smith, JD, CIC, CAE Chief Executive Officer jeff@iavaluations.com
Colleen Elliott Marketing & Communications Manager colleen@iavaluations.com
Craig Niess, CVA, MBA Director of Business Planning & Valuation craig@iavaluations.com
Jodie Shaw, CLCS, CPIA, TRA Director of Business Development jodie@iavaluations.com
Jarod Steed Business Planning & Valuation Analyst jarod@iavaluations.com
For additional questions about this report or to learn more about the services we offer, please reach out at contact@iavaluations.com.
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